Sonic Healthcare trades at 1.23 times sales, below its five-year average of 1.94 times. The ASX healthcare sector trails the broader market. Analysts cite defensive spending and U.S. growth.
Alpha Score of 63 reflects moderate overall profile with strong momentum, moderate value, moderate quality, weak sentiment.
Sonic Healthcare Ltd shares are trading at 1.23 times revenue, below the five-year average of 1.94 times. The broader healthcare sector has underperformed the ASX 200 over the past five years.
The S&P/ASX 200 Healthcare Index returned -9.50% annually over the five years through March, compared with a 4.21% annual gain for the benchmark, according to S&P data.
Healthcare spending tends to hold up during economic downturns because it is largely non-discretionary, analysts said. During the global financial crisis, healthcare was the best-performing sector.
U.S. healthcare spending, which accounts for more than 40% of the global total, is projected to grow 7% a year from 2022 to 2027, reaching $819 billion, according to government estimates.
A Morgan Stanley survey published this year found more than half of investors plan to increase their allocation to sustainable investments in 2024. Sectors that provide essential services, such as healthcare, are well-positioned to attract that capital, the survey said.
Sonic Healthcare, listed on the ASX in 1987, provides laboratory medicine, pathology, diagnostic imaging, radiology, general practice medicine and corporate medical services. The company has said it prioritises medical excellence and a supportive workplace.
Within healthcare, sub-sectors such as healthcare IT and software-as-a-service are forecast to grow revenue more than 15% a year from 2024 to 2030, industry reports show. Sonic Healthcare's exposure to technology-driven diagnostics places it in that faster-growing category, analysts said.
The price-to-sales multiple is below its historic average. It does not account for debt or cash holdings. Investors typically use discounted cash flow or dividend discount models for a fuller valuation, analysts noted.
Sonic Healthcare's next earnings report is scheduled for August.
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